The Thailand Securities and Exchange Commission (SEC) is on the verge of a significant transformation in its trading infrastructure by introducing a Distributed Ledger Technology (DLT)-based debt instrument trading system. This initiative marks a pivotal move towards modernizing the country’s financial markets and enhancing the trading environment for digital tokens. With the aim of promoting digital token trading among securities firms, the SEC is carving a path that is expected to reshape how financial transactions occur in Thailand.
Currently, the trading landscape in Thailand is marred by inefficiencies that hinder both issuers and investors. According to Jomkwan Kongsakul, the deputy secretary-general of the SEC, the existing process for bond purchases can take 7 to 14 days before they are available in the secondary market for trading, resulting in a slow and cumbersome experience for investors. Additionally, many investors find themselves grappling with limited access to various financial products along with the high costs and illiquidity associated with some bonds. Simultaneously, issuers are burdened with extensive manual paperwork, fraught with delays and mistakes, which contributes to the overall inefficiency of the capital markets.
By adopting DLT, the SEC hopes to tackle these challenges head-on. The technology promises to enhance operational efficiency, streamline processes, and address market barriers. This digital approach is not just about upgrading processes; it aims to eliminate the headaches associated with traditional trading mechanisms.
The SEC envisions a comprehensive digital bond trading system that encompasses both primary and secondary markets. This system will cover all necessary aspects, including trading, settlement, investor registration, and return payments. The assurance from Kongsakul that competition will be preserved is a reassuring factor for firms looking to develop their DLT infrastructure. As long as they ensure interoperability within a unified framework, firms will have the freedom to establish independent chains. This approach fosters innovation and competition, vital ingredients for a vibrant financial ecosystem.
As the long-term strategy unfolds, the SEC is also paving the way for a standardized framework that can facilitate data connectivity within the digital securities space. For companies lacking their own blockchain infrastructure, access to the SEC’s public chain will be available at a nominal cost, promoting inclusivity in the digital asset sphere.
The anticipated DLT-based system is set to convert existing financial products into digital assets, facilitating smoother transactions on the network. This evolution will allow for fractional trading at lower costs, thereby enhancing liquidity by attracting a broader range of participants. Moreover, the adoption of DLT technology will enable real-time transactions and significantly mitigate settlement issues that have plagued traditional systems.
The SEC’s commitment to these enhancements is underscored by the introduction of the SEC Open API data platform aimed at furnishing investors with comprehensive information about all listed companies. This will empower investors to conduct deeper analyses and make informed decisions, fostering a stronger investment culture within Thailand.
As part of its broader initiative to embrace digital assets by 2025, Thailand is exploring a potential pilot scheme for cryptocurrency payments in Phuket. Finance Minister Pichai Chunhavajira has indicated that the government is supportive of digital asset integration, driven by increasing global demand and shifting geopolitical dynamics. Nonetheless, the minister has acknowledged that Thailand is still in the preparatory phase and must establish a robust platform for user verification and secure crypto transactions.
The proposed system aims to enable tourists to register their digital assets on local exchanges for various transactions, including property purchases and service payments, with automatic conversions into Thai Baht. To ensure regulatory compliance, the pilot will operate within a controlled sandbox environment.
Thailand’s SEC is embarking on an ambitious journey towards the digitalization of its trading landscape, a move that holds the potential to revolutionize the financial market infrastructure. Through the application of DLT, the SEC aims to eliminate current inefficiencies, enhance trading experiences, and increase market participation. As the country navigates its transition toward embracing digital assets, the future appears promising for investors, issuers, and the financial ecosystem at large. This innovative stride not only aligns Thailand with global trends but also positions it as a leader in fintech within the Southeast Asian region.
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